Section 54F deduction for bungalow construction allowed where sale proceeds were traced to residential house investment despite land not standing in assessee's name.

Deduction under section 54F was allowable where the assessee substantiated that sale consideration was invested in construction of a residential bungalow through construction permission, approved plan, agreement, payment receipts and completion certificate. The relevant inquiry was the nexus between the sale proceeds and construction of the residential house, not merely whether the underlying land stood in the assessee's name. Revenue's reliance on cases involving absence of title or supporting evidence was distinguished on facts. The disallowance was therefore not sustainable and the assessee was entitled to the section 54F deduction.

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Issues: Whether deduction under section 54F of the Income-tax Act, 1961 was allowable where the assessee claimed to have invested sale consideration in construction of a bungalow on land gifted by his mother, and the revenue denied the claim on the ground that the gift deed was unregistered and the land was not in the assessee's name.

Analysis: The assessee produced the construction permission, approved plan, construction agreement, payment receipts, and completion certificate, all showing that the construction was undertaken in the names of the assessee and his brother and that the investment was made out of the sale consideration. On these facts, the relevant inquiry was whether the assessee had invested in construction of the residential house for the purpose of section 54F, and not merely whether the land stood in his name. The cases relied upon by the revenue were distinguishable because, in those matters, the assessee had failed to show any title or supporting evidence connecting him with the property, whereas the present record established the construction and investment nexus.

Conclusion: The assessee was entitled to deduction under section 54F of the Income-tax Act, 1961, and the disallowance was not sustainable.

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